How Incorporating a Business Protects an Ambitious Entrepreneur’s Personal Assets
While this might be an accurate picture in the early days, there comes a time when a successful enterprise needs to be on a firmer footing, which can often mean going down the path of incorporating your business. This move has many advantages, from increased credibility with customers to easier access to commercial financial services, but one of the most attractive benefits for the entrepreneur is that, should the worst happen and your business gets into trouble, your personal assets will be protected.
No one goes into a new venture expecting failure, but the sad fact is that six out of ten new businesses fail within the first five years. Incorporation provides a level of protection should things go wrong, so that closing your business down needn’t threaten your personal wealth. What does incorporation offer an entrepreneur in the way of extra financial security?
- So long as you haven’t registered your home as a business asset, you can’t be forced to sell it to clear outstanding commercial debts.
- Incorporation separates your business and personal credit cards, loans, and bank accounts. Your private wealth can’t be raided by finance companies to put your business accounts back into the black.
- Your company will assume a credit rating of its own and start to build up a history entirely separate from your private file so that business failure won’t destroy your personal credit rating.
Setting up an LLC or another type of corporation may seem like a significant step to take, but it’s a relatively simple process. Welch Law will coordinate the whole operation, and help you put together the necessary documentation for the state in which you choose to incorporate. The costs involved vary from state to state, but with options starting at only a few hundred dollars, it’s a small price to pay for the protection of your personal assets if the business environment goes bad.
A shrewd entrepreneur makes plans to handle whatever the future brings, and this means putting precautions in place for when things go badly as well as for success. Setting up a corporation or an LLC frees you to pursue your business dreams without worrying you could lose everything if your enterprise doesn’t go precisely to plan.